I suspect modern oils may have an effect on the winding insulation, which would cause it to breakdown and allow windings to short against other windings or the winding's frame.
None of the stator windings should have continuity to the engine case. If so, you have a problem. The stator can be tricky to measure for shorted windings since the resistance is very low (~ .35Ω, which is about what meter lead resistance is).
Need a milliohmmeter, or measure the AC voltage the windings produce.
May as well measure the field winding resistance, too.
I don't know how you determined the charging system is putting out 11v. Any battery that measures this voltage is seriously depleted, and will take a good long while to raise it's voltage (assuming the battery is good), and you just can't test a charging system with a bad or depleted battery.